Jurisprudentiol – Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Customs

Where determination of moisture content was imperative in context of ascertaining whether garlic imported by appellant was fresh or dried, it was necessary to get sample tested - Visual examination of garlic by Commissioner to hold that it is not dried is erroneous - Confiscation and penalty set aside: CESTAT

THE Commissioner, after referring to Policy Circular no. 32/RE-99)/2000 dated 17.09.1999 issued by the DGFT, which clarified that garlic containing water content more than 10% would not be treated as dried garlic, took the view that the goods in question had “sufficient water content” and hence could not be imported without licence. He referred to certain Explanatory Notes contained in Chapter 7 of the HSN (edible vegetables, certain roots and tubers) and claimed support there from to hold that the goods in question was not dried garlic.

Income Tax

Income tax - Whether sum received on transfer of IPRs constitutes receipt of capital nature and hence, taxable as capital gains and not business income – It is capital gains: ITAT

THE main issues before the Tribunal are - Whether the amount received by assessee on transfer of IPRs such as trade secrets and goodwill constitutes receipt of capital in nature and hence taxable as capital gains and Whether non-compete fee received by the assessee is capital receipt particularly when such fee debars assessee from continuing business. The verdict has gone against the Revenue.

Service Tax

Service Tax – Eligibility of CENVAT credit of service tax paid on sales promotion service availed for promotion of goods manufactured by appellant - Sales promotion specifically covered in definition of ‘input service' – Full waiver of pre-deposit of Rs. 61.44 crores ordered and stay granted – CESTAT

THE Appellants entered into a sole selling agreement with Larsen & Toubro Ltd (‘L&T') wherein L&T was appointed as the exclusive agent to market various products manufactured by them and paid commission for rendering such service to the appellant. The department issued a show cause notice on the ground that the sales promotion service received by the appellant did not constitute any input service and therefore they were not entitled to avail credit of service tax paid by L&T on the commission received by them from the appellants. An amount of Rs. 61.44 crores was confirmed as irregular availment of CENVAT credit.

See our columns Monday for the judgements